On the 16th, at the S&SYS factory in the Noksan Industrial Complex in Gangseo District, Busan. In the third-floor inspection room, the “brains” to be mounted on 14 ships, including Samsung Heavy Industries’ liquefied natural gas (LNG) carriers, were undergoing pre-shipment tests.

Inside more than 100 steel cabinets as tall as a person, industrial computers, control cards, and communication modules were stacked layer by layer. When several of these cabinets are bundled as one set and installed throughout a ship, they operate as the voyage control system. With a single monitor, crew members can monitor and control key equipment at a glance, including the engine, LNG cargo tanks, and gas supply units.

Because the system handles highly explosive, cryogenic LNG alongside gas equipment, integrated control technology is directly tied to navigation safety. This is why shipowners visit here to check whether control commands operate as designed.

S&SYS is the only company in Korea that independently developed an advanced voyage control system and supplies it to shipowners around the world. The voyage control system, for which ship-specific, customized algorithm design is essential, has become the company’s core revenue source.

One floor below, switchboards, the ship’s “power heart,” were being built. A switchboard distributes electricity supplied to a ship to locations such as the engine room and cargo tanks, and it is a flagship item that accounts for about 60% of S&SYS’ sales.

On site that day, more than 40 power distribution units destined for LNG carriers for a Qatar project were lined up for high-voltage testing. LNG carriers use more power and have higher safety standards than general merchant ships, making switchboard reliability especially important. S&SYS this month won orders for switchboards to be installed on seven LNG carriers being built by Hanwha Ocean. This is the first time it has secured an order for high-voltage switchboards for Hanwha Ocean’s LNG carriers.

Shedding the ‘Samsung’ label to stand alone… broke the monopoly with price competitiveness and after-sales service
S&SYS was spun off from Samsung Heavy Industries in September 2017. At the time, amid a shipbuilding slump that left Samsung Heavy Industries with trillion-won level losses, the company moved to restructure its workforce and separated the electric and electronics division, which produced ship switchboards and control equipment, into an independent entity.

The separation was carried out by spinning it off as an independent company, reducing internal staff while maintaining the core equipment supply chain. Of the division’s 135 employees, more than 90 joined the new company, and S&SYS started with capital of 4 billion won, including 19% equity from Samsung Heavy Industries and investments from executives and employees.

Approaching the 10th anniversary of standing alone, S&SYS is shedding the “Samsung” label and breaking down solid market barriers. In ship equipment, shipyards and shipowners prefer vetted suppliers and are reluctant to change vendors. The entry barrier is even higher for LNG carrier equipment directly tied to safety.

Initially, the perception that it was a company spun off from Samsung Heavy Industries was an obstacle to winning orders from other major shipyards. But over several years, it steadily built trust by first supplying equipment to Hanwha Ocean’s very large ammonia carriers (VLAC) and very large crude carriers (VLCC), proving its technological prowess. As a result, it has even secured orders for the most demanding LNG carrier equipment.

It is also achieving results in head-to-head competition with Norway’s Kongsberg, a ship equipment company that has virtually dominated the global high-performance ship control market for decades. The differentiators that pierced the solid monopoly are price competitiveness and the after-sales service (AS) network.

S&SYS targeted demand at shipyards desperate to cut costs by offering unit prices 20% to 30% lower than Kongsberg’s control systems. Conservative shipowners who preferred to stick with familiar foreign products were persuaded by technological stability and immediate AS responsiveness.

Kim Ung-su, executive director in charge of management planning at S&SYS, said, “Even if a ship stops in the middle of the Pacific, we accurately identify the cause of the failure through a remote maintenance system that uses satellite communications,” and noted, “Shipowners like it because repair time and operating costs are reduced.”

S&SYS has ship AS agents in more than 100 locations worldwide and dispatches its own personnel by operating direct centers and entities at key maritime hubs such as Singapore and Shanghai, China.

Backlog of 264 billion won… breaking the cycle with entry into China and onshore switchboards
As it sequentially broke down order barriers at home and abroad, the order backlog grew to 264 billion won. Operating profit, which was 900 million won in the first year after the 2017 spinoff, increased to 17.7 billion won last year, and it was listed on KOSDAQ.

The client base is also diversifying. The share of sales from Samsung Heavy Industries, which had exceeded half as recently as last year, fell to the 40% range in the first quarter of this year. The number of ships to which S&SYS supplied control equipment and switchboards has reached a cumulative total of more than 6,500.

The next growth pillars are China’s shipbuilding market and the MRO (maintenance, repair, and overhaul) business. The goal is to build a business structure that does not sway with shipbuilding order cycles and continues to generate cash even after a newbuild boom. To target China’s newbuild market, which is 10 times the size of Korea’s, S&SYS plans to begin operating a production plant in Nantong, Jiangsu Province, in November. It is aiming at demand from Chinese shipyards for control equipment and switchboards as LNG and methanol dual-fuel vessels increase.

MRO is a recurring revenue source from ships already supplied. Switchboards and control equipment installed on ships require inspections and replacements over a ship’s 20- to 30-year lifespan. The larger the cumulative number of supplied ships, the more paid after-sales revenue grows in tandem. S&SYS’ paid AS sales have recently increased to the mid-30 billion won range annually.

It is also pushing into onshore power grids. Ship switchboards must withstand demanding conditions such as vibration, humidity, high temperatures, and explosion protection. Technology designed to endure such environments can also be applied to power facilities at semiconductor plants and data centers. Recently, it began supplying switchboards to Samsung Electronics’ semiconductor fabs. S&SYS has presented a goal of building a business portfolio that spans ship and onshore power grids to reach 500 billion won in sales and 60 billion won in net profit by 2030.

Source: ChosunBiz